South Korean stocks could experience more volatility next week as investors move to rebalance their portfolios to reflect the latest economic data and prospects for the US interest rate following the Lunar New Year holiday, analysts said Saturday.

The benchmark Korea Composite Stock Price Index closed at 2,421.83 points on Wednesday, the last trading session of this week, with the traditional holiday beginning on Thursday. It marked a 2.39 percent gain compared to last Friday.

The local market rebounded from last week's slump as the Wall Street rose for three consecutive days to pare some of its own losses, which amounted to the worst weekly decline in two years.

Tech and bio shares were among the top performing sectors of the week, while food and utilities were at the bottom.

"The market could fluctuate on the prospect of interest rate hikes until the US Federal Reserve gives a clear signal in March," Seo Jung-hoon, an analyst at Samsung Securities, said. "Following a recent correction, the market could draw passive funds that track market indices in the short term."

Investors will wait for the minutes from the Federal Open Market Committee on Wednesday to get a glimpse of the pace of the US interest rate hike in the coming months. US jobless claims will be released on Thursday.

South Korea announces the producer price index on Wednesday and releases fourth-quarter household debt data the next day. (Yonhap)